County Board of Supervisors Lets Voters Decide on Local Cannabis Tax

The County Board of Supervisors approved a proposal to place a measure on the June ballot to let voters decide on a local tax for cannabis-related businesses.

The tax measure was proposed by Jim Erb, the County Auditor-Controller-Treasurer-Tax Collector (ACTTC). The Board also selected Chair John Peschong and Supervisor Adam Hill to submit an argument in favor of the tax measure for the June ballot.

The proposed measure would place a tax on the gross receipts of cannabis-related businesses operating in the unincorporated areas of San Luis Obispo County (The seven incorporated cities each have their own regulations regarding cannabis). The tax would start at 4 percent (up to a 10 percent maximum) but would give the Board flexibility to adjust the rate of taxation for different cannabis business types. Additionally, cannabis testing facilities are exempted from the tax.

The proposed tax, if approved by voters, would increase in 2 percent increments each fiscal year to a maximum of 10 percent beginning in July 2020, unless the Board acts to maintain or lower the current rate. This proposed tax would be in addition to the State’s 15 percent tax on cannabis-related businesses.

“The tax on cannabis businesses is intended to offset the impacts of legalized cannabis in our county,” Erb said “We anticipate that there will be increased demand for code enforcement, law enforcement, health care, and education. Without this cannabis tax, these increased needs would have an impact on the County’s General Fund, which is needed to operate other vital county services.”

The County Board established regulations on the local cannabis industry in late 2017, including land use and business licensing policies. Those regulations took effect this year.

The tax measure will next be submitted to the County Clerk-Recorder for inclusion on the June 5, 2018 ballot. If approved by county voters, the cannabis-related business tax is expected to take effect on or near July 1, 2018. According to County Clerk-Recorder Tommy Gong, the tax measure is expected to be known as "Measure B-18" when it appears on the June ballot.